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4 reasons your health insurance premium might go up

Even if it does, you might be eligible for a subsidy

Published: November 08, 2013 11:00 AM

Photo:
Blue Cross Blue Shield

Q. I live in Illinois, and my Blue Cross Blue Shield plan is being canceled and my premiums are doubling. Is this possible or am I missing something ?

A. This is a question inflaming so many consumers that President Obama went on the news last night to sympathize with people in your situation. And there are lots of possible answers to why this is happening to you. Here are four of the most likely explanations.

1. You had a bad plan

Your existing plan might be a terrible one that deserves to die. I've been corresponding with a reader in the Pacific Northwest angry that his wife’s insurance company is discontinuing her $367-a-month plan and replacing it with one that costs $549 a month. But it turns out the disappearing plan doesn’t cover prescription drugs, which would leave her at huge financial risk if she ever needs a specialty medicine, some of which cost $2,000 or more a month. The elimination of Swiss-cheese plans like these is a feature of the new health care law, not a bug. The new plan will cover drugs because they are an “essential benefit.” It’s a better plan.

2. You don't know you're eligible for a subsidy

You may not realize you qualify for financial help. The gentleman who wrote me, for example, was unaware that based on their household income, his wife was eligible for a premium tax credit that would bring down the price of a new comparable plan from that same health insurer to only $267 a month—prescription drug coverage included.

3. Your insurance company is holding back info

I've now looked at dozens of these cancellation letters and it seems that insurance companies are often trying to hold onto these customers to preserve all-important market share. So the letters are downplaying the fact that people have other options besides the replacement plan picked by the company. Which means you should not take the insurance company’s word for the new premiums. Instead, look at the plans available on Get Covered Illinois, your state's Health Insurance Marketplace, to see if you can get something equally good for less.

4. You were getting an extra-good deal in the first place

Your plan might be a fairly complete one (perhaps missing maternity coverage, which is rarely offered in the current individual market). When you bought it you were by definition healthy, because prior to the new health law, insurance companies simply would not sell to individuals with pre-existing medical conditions. Now, thanks to the new health care law, they have to cover those folks, and can't charge them extra. But you can't expand benefits and insure more sick people without the money coming from somewhere. So a few people, who were on the winning side of the old system, are going to end up paying a bit more, no getting around it. And if they're relatively affluent, they won't get a subsidy to help with the extra costs. Here’s a profile of one such couple by Charles Ornstein of ProPublica.

Got a question for our health insurance expert? Ask it here. It helps if you include the state you live in.

— Nancy Metcalf

Follow me on Twitter @NancyMetcalf

Health reform countdown: We are doing an article a day on the new health care law until Jan. 1, 2014, when it takes full effect. (Read the previous posts in the series.) To get health insurance advice tailored to your situation, use our Health Law Helper, below.